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America's Income - Who Has It?
America’s tax system and the major social programs (Medicaid and Obamacare) are driven by income. The Social Security Administration has put out a report on income in America. The data covers all wage earners (153.6 million workers and the $6.5 Trillion they earned). The Following is a pic of the report (link), if you’re working, you’re somewhere on this page:
Let’s start at the top of the pile, those that are making the really big bucks. For example, consider the number of people who made $50m in 2012 (the 0.0001%). There are 166 people in this group. Who are these folks? Basketballer Lebron James made the list, so did actors/performers Robert Downey Junior, Beyonce, Cameron Diaz and Christian Bale. From the corporate side we have Disney’s Robert Iger and Apple’s Tim Cooke.
Who are the wealthy in America? Anyone making over a million bucks a year is certainly on the list. The plus $1M set totaled 119,400 people (0.08%). These lucky few earned a total of $170b (3% of all income). How much should these folks be paying in taxes? Let’s go hog wild and nail them with a tax of 90%. The incremental revenue (they already are taxed at 39.6%) would be $85b, but sadly, that only covers five weeks of Social Security benefits.
The IRS defines ‘rich’ as an individual with annual income of $200k ($250k per couple). This income level marks the 1%:
1.6m workers (1% of total) earned $900b (14% of all income). This is the measure of US income inequality. The 1% earn 14% of the pie. If the federal tax rate were increased to 75% (double current), it would increase revenue for Uncle Sam by about $150B. That does not fill a $1 trillion bucket, and it would be an economic disaster to set tax levels at French rates. Bottom line – the notion that taxing the rich is a solution is all wet.
Now consider the bottom. In the case of Medicaid, the cut off for availability is equal to 138% of the Federal Poverty Level (FPL). For a single person the number is $16,600, for a couple it’s $22,000, for a family of four it’s $33,000. The average income for all individuals/families that might qualify for Medicaid is about $25,000. If you look that up on the SS chart you see that a whopping 46% of all income earners can qualify for Medicaid.
And then there is the Affordable Care Act (AKA Obamacare). To be eligible for Federal subsidies, one must have an income of less than 400% of FPL. Depending on family size, subsides are available up to $90,000 of income, but the average income where the subsidies are significant is closer to $50K. Again, look up that income level on the SS chart. 73% of all workers make less than $50k! 7out of 10 workers are eligible for subsidies? That blows my mind. No wonder the Democrats love ACA so much - freebies have always translated into votes
So who is left in the middle? There were 41m workers (23% of total) who made more than $50k and less than $250k. This group earned $3.5T (52% of total income). So the middle is where the money is; a quarter of all workers earn half of all income.
If Washington needs more revenue, it must come from the folks in the middle. But the reality is that the middle is already taxed from every direction (they also pay state income taxes, Social Security and other payroll taxes, property and sales taxes. So once again, raising taxes as a way of balancing the nation’s ledger seems to be a very difficult task.
What to make of all these numbers? Something is clearly wrong when 47% of workers earn a poverty level income. Similarly, there is something wrong when 1% of workers earn 14% of all income. The obvious solution is to tax those on the top and transfer it down to the bottom. But that is what we are already doing; more of the same is not going to change the outcome.
My conclusion is that America is not the ‘rich’ country that people think it is. And there ain’t a hell of lot that can be done about that.
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Bring back the math questions!
Defective thinking. Millions of people have their retirement funds tied up in mutual funds with absolutely no say in how those bucks are invested.
And who has time to go through reams of 10-K statements looking for the pearls of waste?
That's why they're called "Pass Thru" corporations. Corporations are just accounting gimmicks allowing themselves to pass through all costs to the consumer.
Of course they are to a degree subject to market forces. You can't pass all your costs onto the consumer if they don't buy your products. In that case, like Solyndra, you need to be friends with ObamaDon'tCare.
Of course all costs are passed thru to the consumer if you buy the product including the cost of all taxes. You may eventually get it. Lol
Opulence. I has it.
The headline for this article suggests that nothing can be done about today's bizarre income distribution in the US. Horseapples! During WWII the top level tax rate was 90% and only those affected complained. The rest cheered. The national culture was different then. Almost everyone agreed that the burden of he war should fall most heavily on those who were profitting the most from it. If our congress were to reflect the true sentiments of their constituants, rather than their wealthy donors, a more equitable distribution of income could be initiated. Other measures that would help would be a reversal of the supreme court's citizens united decision and the assignment of corporate charters to a federal administrator rather than state governments. The Swiss government has recently outlawed excessive executive compensation. No one accuses the Swiss of being anticapitalist.
"During WWII the top level tax rate was 90% and only those affected complained."
No one complained because no one paid it. Another thing I've been telling people who don't seem to get it is: You cannot judge a tax regime by only looking at rates, you also have to also look at rules.
Back then, you could income average. Now you can't. You had unlimited loss carryovers. Now you don't. You could claim unlimited capital losses. Now, you're limited as to how much you can claim in a single year. And lot's more
Very true; there used to be a whole "Tax Shelter" industry. I remember it well; and the scams and scandals that accompanied it. There must have been someone, somewhere who paid the 90%; but no one knows anyone who ever heard of him.
Elvis may have been the only one, which is why he died more or less broke.
Much easier to move stuff offshore today, and if you think the IRS moves against this in the last ten years are big, wait for the next ten. Obamacare alone may be enough to cause millions of people to move a large part of their net worth out of the country - where they can get medical care. I suppose a large number of doctors may start to emigrate, too. Just wait for this all to get started. May have to cripple doctors and chain them to the bedstand.
The devil's in the details. Take out the top 300 incomes and US per capita income equals Brazil's. Yes, we can eat the rich. There are only a few of them.
Yeah; it's not a useful concept. Like Cannibalism in the lifeboat; it doesn't last long and it's basically pointless.
How many people actually reported an income subjectvto 90 percent tax rates?
People in that one percent can make their income appear and disappear when they wish.
Income distribution looked great during the mid 20th century merely because high earners chose to take their compensation in ways that didnt count as net income.
All of the millions of laws and policies dealing with race and "civil rights" (sic) are stacked against Original Americans (whites), who are the biggest producers of wealth. This aggression will not stand, man.
Ha, ha, ha. Are you serious man? The original Americans were the Native American tribes (incorrectly referred to as "Indians"). Since the Europeans arrived and pushed the natives out of the way, the biggest producers of wealth were slaves from Africa and debt slaves from Europe. In the process, the energy and discipline of European and Asian immigrants accelerated the process. Their varied talents contributed to the rapid expansion of American culture and wealth. This immigration has continued to expand through the present day.
Snark just goes way over your head?
He wasn't snarking...
The notion that the 1% is an enduring class is largely risible, many people enter that from capital gains wins, which are the in a given year but not permanently. Inheritance, wins at Vegas, selling an inflated house put many people in the 1% in a given year, but not there permanently. Most who stay around that upper level nearly all work in entertainment.
"---wins at Vegas put many people in the top 1% in a given year"---Really? You've got a firm grasp on reality, don't you? It's an enduring class because it's defined as an enduring class; nowhere is it stated that they're the same people every year; if you could actually think, the world would look entirely different to you. Unfortunately you can't even imagine such a thing.
There's an easy way out of this. No need for Bruce to engage in another "throw grandma under the bus" anti-social security jeremiad. It's called the Wall Street 1% TransactionTax. Funny how this conveniently escaped Bruce's attention. Check Randy Credico who is running for New York mayor, the best kept secret of folks like Bruce, the Koch brothers, and their trusty lackeys, the main street media. Better yet, vote for Credico on Tuesday. Show Wall Street that you would like them to share the tax burden with us tax donkeys.
www.credico2013.org/
Geez, you mean like that very same tax which lasted from 1914 to 1966 but ended during the LBJ administration?
(President Kennedy actually discussed raising that tax, the very same time he proposed his Alliance For Progress for land reform throughout South America --- sadly a severely compromised piece of legislation after his assassination!)
Tax the corporations
For the 1,00th time, corporations do not pay taxes. They remit taxes on behalf of the corporation's customers and shareholders. ONLY individuals actually pay taxes.
Wrong. Corporations do pay taxes on their net earnings, but you are not far off the mark. The amount of taxes that corporations pay has been steadily decreasing as they obtain ever bigger loopholes from their captured congress. But your argumentation suggests an excellent idea: Let the profits of the corporations flow through to the individual returns of the stockholders. This would not only help resolve the budget crisis, but also help reduce the mal distribution of income from which we are currently suffering.
You're missing the point, so here it is step-by-step. Taxes are paid based on profits. Profits come from sales minus costs. Sales come from customers. What happens is that the taxes a corporation pays is built into the price of whatever they sell. In other words, a stealth VAT.
absolutely true. forget "closing loopholes" and "tax reform." buy gold...silver too. that's the law of the land right now. the "winners" (Chinese are a great example btw...cash and cash only please!) are those that are "hiding" their wealth while the money machine is cranking up. it's not like running the business is complicated at this point: maximize your internal cash flow and focus on final sales...explain to your suppliers and distributors what the "deal is" and don't forget to pay yourself "for your brilliance." even XOM has discovered "getting more oil out of the ground means more profits." wow! great job! in the meantime the guy you laughed at for cleaning out your oil tanks twenty years ago is now one of the richest men in the world. don't even get me started on Sam Walton. That guy never traded in in 1963 Ford F 150 even though he was one of the richest men in human history.
Do you also think that employees dont pay the employer "contribution" to FICA?
I just dont have time to explain. I dont care what arbitrary point taxes come from but leftists shouldnt trade on deception.
A corporate tax is just a stealth VAT.
Thank you. I've been telling people this for years. The corporate tax is a stealth VAT.
I wish people would understand it doesnt matter what arbitrary point you collect the tax. It ultimately comes from the same source.
I guess if people are taxed indirectly thru "greedy corporations" then it is easier to get it passed. Those same people believe that the employer portion of social security tax is actually "paid" by the employer lol
In reality it is.
The corporations just tell you that its part of your salary.
But, unlike a corporation, you the victim of this fraud are unable to deduct the amount paid on your behalf by the corporation from your income taxes.
OMG such economic illiteracy. Lol
As an employer I look at the total amount I have to pay to employ you, and judge it based against the value of your services.
Total amount I have to pay to employee you includes benefits, unemployment and workmans comp taxes and the amount I have to pay tp social security (6.25%)
Your paycheck is adjusted up and down based on the total costs I have to pay to employ you. You pay the employer contribution for SS and you pay for your workmans comp and disability and benefits. You just dont realize it.
If I am willing to pay a maximum of 80,000 dollars to employ you (or just do without your services otherwise) then you only get a part of that. The rest goes to FICA and your benefits as well as other taxes and fees directly related to your employment.
That is exactly the calculation corporations must do to decide to hire or rent via 1099.
Then you compare what you have to pay to get Sanjay (sorry Beverly) from India to do the same job.
Problem was that corporations did not adjust for the incompetence factor. Some 1099s are moving back to hiring US engineers rather than deal with Indian HS gradiates for 2/10s the amount.
If only Krastink could do simple math. The 1% do not work for their living! They live on capital gains! I always ask why did I waste my time with anything he has to say?
Lebron is not working? Beyonce is not working?
They may be overpaid, but they're working.
This data covers all earned income. Look at the income number that SSA provided. They have it down to the penny. This is what is reported to the IRS.
Even those people will earn and some already do more through cap gains! Spin Krastink, but the wealthiest 1% pay cap gains!
sgt_doom awards you as the most intelligent commenter here today, sir!
Tax all income at equal rates. Labor is as worthy of respect as capital. Thre should be no favoritism.
Tax nothing. Get rid of the Government as it is irrelevant. It produces nothing and leads only to Death and Destruction.
I knew a woman from India who told me "There are no poor people in America. If you want to see what it really means to be poor, go to India."
People are poor only if you don't count what they get as non-cash benefits. Medicaid is better than what most people can get in the insurance market. SNAP comes off a piece of plastic and doesn't count as cash. Public housing and Section 8 subsidies are also not counted as income. And don't get me started on Obamaphones. If you counted any of the benefits that the poor receive by their cash equivalents, it would be clear that the "poor" are actually doing quite well, thank you. And they'll keep getting it as long as they vote Democrat early and often.
That's why, for the first time in human history, obesity is a problem among poor people. That's why "poor" kids go out and buy $200 sneakers.
For someone who can say this much better than I ever could: http://sultanknish.blogspot.com/2013/11/the-cloud-dwellers.html
The bottom 10% in the US are in the top 30% of world. For those who want to make things "equal," everyone in the US will get a big haircut.
Interesting but perhaps misleading. Wealth is not always related to wages and BK himself has talked about means testing as being, perhaps, a better measure to determine eligibility for Federal programs. Lets take a former athlete. I doubt Joe Montana or Jack Nicklaus makes much if any 'wages' these days. They don't have to but they are very rich men. There are descendants of yesteryears tycoons who have not earned wages in their lifetime but are still very wealthy.
A modest wealth tax on fortunes above a certain level might be better economics than relying so much on income taxes. Lets say .1% on net worths above $10 million rising to 2% on fortunes above $1 billion per year. This is not unduly burdensome and would make some very wealthy people decide that paying $100,000 per year to keep an old painting hanging on the wall or vintage car might be better spent invested to earn income to pay their wealth tax.
Your assumption is that government can allocate this capital better than those who generated it in the first place. I want capitalists to keep their capital since they are the ones with "skin in the game" If its other people's money, OPM, I and no one else gives a damn what happens to it? That's human nature and that never changes.
And you're very wrong-as the soviets and more recently the Chinese discovered!
The solution is get the government out of unconstitutional activities (dept of educaion, dept of energy TSA, NSA, medicare, medicaid etc.)
"A modest wealth tax on fortunes above a certain level......This is not unduly burdensome....."
This is EXACTLY what they said in 1913 when the income tax was put in the Constitution. Top rate was 7% on income over $11 million (in today's $$).
The government will NEVER stop wanting more.
The government does not have a revenue problem.
Steal it all!
The FSA has a voracious appetite.
The FSA includes those on Wall Street and those serving in the halls of Congress.
That may all be true but the fact remains taxing wealth is less adverse to the economy than taxing income for the simple reason that people receiving income are engaged in economic activity while people with vast art, vintage automobile, antique collections are not. If taxing the income of economically productive people is fair then why is it not fair to tax the accumulated wealth of non productive people?
How about this, get rid of the government get rid of taxes. Get rid of corporations and bring back real competition. When you see government pukes driving around in limos and they want more taxes that's your first clue we need to start hanging these motherfuckers
damn i love this guy!!!.....hang 'em all!!!!!!!!
First confiscate all the wealth they acquired since being in office. I'm pretty sure their purpose is to serve their constituents not get fabulously wealthy while serving in Washington.
But in 1965 the US was a rich country. Especially compared to other countries (except Switzerland). And I doubt that that more imports from Asia explains why the US no longer richer than other countries. Switzerland imports about the same stuff from Asia.
When Mark Twain was asked how he went bankrupt he replied
"first very slowly, then very rapidly."